Hurricane Katrina’s big contracts go to companies in political loop

Washington  When Hurricane Katrina struck, Ashbritt Inc. was well positioned to take advantage of the torrent of government dollars that followed.

The Pompano Beach, Fla., firm had spent years cultivating its relationship with the federal government, contributing tens of thousands of dollars to the Republican Party and, more recently, hiring a powerful firm to lobby the U.S. Army Corps of Engineers on "disaster mitigation."

After Katrina hit, Ashbritt was given the largest award to date - a deal worth up to $1.1 billion from the corps for debris removal.

It is a story of government ties that is repeated time and again for the winners of the 10 largest Katrina contracts, according to an Associated Press review. At least four of those contracts are now being reviewed for possible waste and abuse.

All 10 companies are located outside the affected Gulf Coast region, most are politically active and most got the work after a limited bidding pro-cess.

"How can the government say it is serious about reconstructing the Gulf Coast and edge out small and minority-owned businesses?" said Rep. Bennie Thompson, D-Miss., the ranking Democrat on the House Committee on Homeland Security. "The only way to make sure the relief funds reach hurricane victims and damaged areas is to be aggressive about oversight."

The Federal Emergency Management Agency and the corps, which give the bulk of Katrina contracts, say they are committed to handing out contracts based on merit and open competition.

FEMA also has pledged to rebid four contracts worth $100 million each to politically connected firms - Shaw Group Inc., Bechtel Corp., CH2M Hill Inc. and Fluor Corp. - that were given with little or no competition. Priority will be given to small and minority-owned businesses.

But the winners of even larger Katrina deals - those valued at $170 million or more - will not have to rebid or renegotiate. Most of the companies had done previous work for the government, either with earlier hurricanes or in Iraq, and those existing relationships were key to winning new deals.

"This shows the best government contractors don't always get hired, the most politically influential do," said Keith Ashdown, vice president of the watchdog group Taxpayers for Common Sense. "We need to strive for more competitive bidding."

Awarded contracts

Some of the deals:

¢ A $521.4 million contract to Gulf Stream Coach of Nappanee, Ind., for travel trailers to house evacuees. Since 2000, company founder James F. Shea and his family have contributed more than $20,000 to GOP candidates, including President Bush and Rep. Bob Ney, R-Ohio, chairman of the House Administration Committee.

¢ A no-bid modification to an existing contract with Landstar Express America Inc. for about $300 million worth of trucking services. Company chairman Jeffrey Crowe recently headed the U.S. Chamber of Commerce, whose political action committee regularly contributes to the GOP.

In a preliminary review, government auditors this week found that the Transportation Department approved payments on the Landstar contract without issuing written orders or otherwise recording them in ways to allow adequate oversight.

¢ A $236 million rush order with Carnival Cruise Lines for six months of temporary housing. The Miami company or its executives have contributed more than $200,000 each to both the Republican and Democratic parties since 2000.

Sens. Tom Coburn, R-Okla., and Barack Obama, D-Ill., have called for investigations into whether the contract price, which amounts to roughly $1,275 a week per passenger if the three ships are at full capacity, is too high.

Also being reviewed is a $287.5 million FEMA contract for temporary housing with Circle B Enterprises Inc., an Ocilla, Ga.-based company that Thompson says is not properly licensed to build manufactured homes in several states.

Circle B says it is not building the actual homes but has subcontracted the work; Carnival officials have said they don't expect to make a profit from their deal. Officials with Gulf Stream Coach could not be reached for comment.

FEMA and Army Corps officials say their early contract awards went to known companies in the interest of providing fast emergency assistance. They denied political connections were a factor.

The Commerce Department, pledging to boost minority contracts, has created a new information center and Web site at www.rebuildingthegulfcoast.gov to help smaller businesses get details and establish contacts on how to competitively bid.

Still, FEMA and the Army Corps have declined to rebid more than the four construction contracts.

"A lot of the contracts that were previously awarded without competition are completed or are beyond the point where it would be economically feasible to re-compete," said Larry Orluskie, spokesman for the Homeland Security Department, which oversees FEMA.

Ashbritt's critics

Watchdog groups such as Taxpayers for Common Sense say one contract that should be rebid is Ashbritt's. The company, which did about $56.7 million in initial Katrina work based on an existing contract, won a $500 million deal for debris removal with an option for $500 million in additional work based on an expedited, open-bid process.

Since 2000, company executive Randal Perkins and his wife Saily have given $50,000 to the Republican National Committee, $10,000 to the Florida Senate campaign of Republican Mel Martinez, Bush's former Housing and Urban Development secretary, and thousands more to Florida's GOP, according to the nonpartisan Political Money Line.

Ashbritt earlier this year hired the lobbying firm Barbour Griffith & Rogers, which was founded by Republican Mississippi Gov. Haley Barbour, and paid the firm $40,000 to lobby the Army Corps and Congress, according to Senate records.

Investigators are examining the contract for possible waste as well as whether Ashbritt had improperly registered with the government previously as a small business, allowing it to get priority for certain kinds of work, according to a congressional staff member who spoke only on condition of anonymity because the review hasn't been made public.

Barbour Griffith & Rogers, which began representing Ashbritt in March, declined to comment; Ashbritt referred media inquiries to the Army Corps.

Doug Garman, a spokesman for the Army Corps, said it selected Ashbritt and three other companies for debris removal - Ceres Environmental Services, Environmental Chemical and Phillips & Jordan, which have all done prior government work - out of 22 bids submitted in three days. Typically the bidding period is at least 30 days.

The final four companies were chosen based both on cost and on experience and past performance with the government.

"We strive to have full and open competition and normal contracting procedures wherever and whenever possible," Garman said. "Politics and pressure from the outside played no role in the decision."